When the U.S. Small Business Administration announced the rollout of the Paycheck Protection Program to help small businesses deal with the financial fallout from the coronavirus and subsequent governmental mandates, banks across the nation were slammed with applications.
“We’ve had requests from all over the country, and we’ve simply said, ‘No, we’re focusing on our region in central Pennsylvania,’” said Bill Hayes, chairman and CEO of Kish Bank.
“This situation is one that the banking industry plays a very critical role in seeing that we get through this. We’re very focused. We recognize the critical role Kish Bank plays in the lives of its customers.”
As of last week, Kish had approved nearly 400 loans and closed more than 200 in a single day.
“It’s been intense, to say the least,” said Hayes.
“Everything we do — from taking deposits to being a place where people can feel their money is secure and safe while markets are volatile — we had to find alternative ways to do almost everything we do.”
In theory, the PPP is intended to provide forgivable loans to small businesses to use on critical expenses such as employee payroll, rent and utilities. But it has been far from smooth sailing for the program’s lenders and loan recipients.
The PPP has already been drained of its initial $349 billion, and Republicans and Democrats were quarreling over adding more funding to the program before agreeing to a deal April 21. Since its launch, the relief program has earned a reputation for being difficult to navigate. The founder of the Shake Shack franchise said the PPP “came with no user manual” and was “extremely confusing.”
“It was all kind of dropped in the banks’ laps,” Hayes said.
“On paper, it looked pretty straightforward. We could take the applications, approve the loans, submit it to the SBA. In reality, the SBA took about a week to get things up and running.”
Hayes said a lot of people got in line early for the SBA loans.
“We had a tremendous backlog of business applications, but no real clarity on exactly what information we needed to collect to verify all the information on the business and the payroll numbers that we would eventually have to rely on to gain forgiveness of the loans,” Hayes said.
“It was a tremendous amount of pressure. We had a group of about 20 team members inside our bank, and some core folks who knew the SBA, who were wrestling with all the qualifying requirements the SBA put out there initially knowing that businesses were hanging in the balance, holding their breath, waiting for this life-sustaining stream of funding.”
Hayes says the banks recognize the enormous strain the current restrictions put on both businesses and non-profit organizations.
“We start to extrapolate that out and think about the number of families, the people who are impacted by this, whose livelihood was suddenly snatched away, and it’s a very compelling story,” said Hayes.
“And it’s not just small businesses. It’s churches. Think about a church that depends on its congregation to support it on a weekly basis, suddenly not being able to hold services. It’s an economic cliff for them as well. A number of charities applied under PPP.”
Kish Bank has also redirected some of its philanthropic support — budgeted for charitable giving elsewhere — toward life-sustaining causes, such as hospitals and food services.
“It was just the light switch, and when it was thrown, everyone at Kish basically had to pivot,” Hayes said.
Hayes said he and his staff have been on daily conference calls to find out what’s happening in Washington, what other banks are doing, challenges the financial industry faces, and so forth.
As his staff keeps their heads down, ploughing through one task after another to get loans processed, Hayes said he told them to pick their heads up once in a while and look around.
“Think about the lives you’re touching,” Hayes said.
“We know that, and we take the responsibility very, very seriously. There was a never a question of if we were going to respond. The question was, ‘How can we do it as fast and as responsibly to our community as we could?’
“When we get to the other side, we can look back and say, ‘Gosh, that was something, but we’re glad we did what we did,’” Hayes said.
